All posts tagged Brookings

French economist Thomas Piketty has caused an international stir recently with his book about disparities in international wealth and income, Capital in the Twenty-First Century. The widening gap between the very rich and everyone else, he said Monday, has returned to late 19th century levels, and is unlikely to reverse itself.

Rather, Mr. Piketty painted a picture of a global policy structure that is increasingly stacked against low- and middle-income households. At a morning discussion with journalists and economists hosted by the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution in Washington, Mr. Piketty called for a number of changes, including changes in tax policy, more transparency into wealth and capital accumulation, and better education opportunities for lower-income students, as some ways to try to address the balance. Read More »

Federal Reserve Chairwoman Janet Yellen was simply echoing prevailing market expectations when she stated the “considerable” period policy makers expect between the end to bond buying and the first interest rate hike was around six months, St. Louis Fed President James Bullard said Friday.

“The private sector had that kind of number penciled in,” Mr. Bullard said in response to questions at a Brookings Institution panel. “She was just repeating that at that time period.” Read More »

The problem of long-term U.S. unemployment may become increasingly entrenched if it is not soon addressed with policies directly targeting those without a job for six months of more, according to a new study by Princeton University economist Alan Krueger, former chairman of President Barack Obama’s Council of Economic Advisers.

In the paper, published with Princeton colleagues Judd Cramer and David Cho, Mr. Krueger argues the long-term jobless have literally lost their connection to the job market and overall economic activity, and must be brought back into the fold or risk finding future employment even more difficult. Read More »

There is a steady drumbeat from some corners of Wall Street and some academic economists that the Federal Reserve’s very low interest rates and unconventional monetary policy, inevitably, will create bubbles and financial instability somewhere. Keeping interest rates on Treasurys and bank deposits so low, the logic goes, is inducing investors and financial institutions to “reach for yield,” which is another way of saying that the quest for higher returns is leading them to take excessive risks.

Japan’s big new economic stimulus program has had a remarkably effective launch. But despite the bold talk of “regime change,” officials still suffer from “a lack of credibility” about their determination and ability to end two decades of decline — and that in turn is still muting the impact of their actions, two American economists conclude in a new comprehensive study of Tokyo’s bid to end two decades of decline. Read More »

The stars could be aligning for Federal Reserve Chairman Ben Bernanke to join the Brookings Institution after his term ends at the end of the month.

Mr. Bernanke was the featured speaker at an event sponsored by Brookings last week, his last public appearance as Fed chairman. His friend and former deputy, Donald Kohn, has been a senior fellow at Brookings since leaving the Fed in 2010. And Brookings has recently established a new center on monetary and fiscal policy, called the Hutchins Center, with $10 million in funding from Glenn Hutchins, a founder of Silver Lake Partners, an investment fund. Mr. Hutchins also is a director on the board of the Federal Reserve Bank of New York. Read More »

The Brookings Institution is bringing a new player into Washington’s think tank arena, launching a center to study fiscal and monetary policy that will be led by The Wall Street Journal’s David Wessel.

The Hutchins Center on Fiscal and Monetary Policy plans to launch next month as an arm of the Brookings economic studies program. Mr. Wessel will leave the Journal to join Brookings in January as a senior fellow and become the center’s first director. He will continue to contribute to the Journal regularly, the company said in a statement.

The new venture will join a long list of Washington policy institutes and research programs focused on aspects of economic policy. The Hutchins Center plans to cover the full spectrum of tax and budget issues alongside the actions of central banks, with a specific goal of exploring the interplay between both areas. “Bringing the two together could be a very powerful cocktail,” said Glenn Hutchins, a private-equity executive who is funding the new center. Read More »

Universal access to high-quality and free preschool education seems an ambition that would have few challengers. But new research shows that such programs can yield unexpected consequences, not all necessarily favorable.

In findings presented Thursday at the Brookings Papers on Economic Activity, authors Elizabeth Cascio of Dartmouth and Diane Whitmore Schanzenbach of Northwestern spelled out how access to free public preschools has different effects on low-income and high income families.

In their paper, “The Impacts of Expanding Access to High-Quality Preschool Education,” the authors compared employment, income and time benchmarks for four-year-olds and their families across the U.S. with those for children and families in Georgia and Oklahoma. Both states have offered public preschooling to all four-year-olds, regardless of family income, since 1995 and 1998, respectively. Read More »

–Jobs Gap: Gary Burtless asks how long it will take to get the U.S. back to 2007 levels of employment, adjusting for population growth. “Although output began to rebound in the second half of 2009 and the number of payroll jobs began to grow a few months later, the U.S. did not begin making substantial progress in reducing its jobs deficit until the beginning of 2011. Since that time, progress has been painfully slow. Employment reported in the BLS household survey has grown an average of 160,000 per month. Adult employment must grow about 80,000 a month in order keep the jobs deficit from increasing. Thus, since early 2011 we have been whittling back the jobs deficit by about 80,000 per month. Given the current size of the jobs shortfall and the recent pace of employment growth, the nation will need another 7½ to 8 years to restore full employment.”

–Downsizing in Europe:Hendrik P. van Dalen and Kène Henkens examine European companies’ apparent preference for reducing staff via buy-outs and early retirement offers rather than layoffs or wage cuts. “The fact that fairness matters in labour market decisions may turn out to be of some importance because issues of generational fairness are becoming more and more prominent in the public debates in countries facing soaring youth unemployment rates. In the view of the general public interest, the obvious solution would be to send older workers into early retirement (or at least to reduce their working hours) in order to pave the way for younger workers to forge their own careers. This type of generational fairness resonates with an electorate suffering the consequences of high and rising unemployment (see OECD 2006). However, this idea of reshuffling intergenerational labour denies the harsh fact that these types of policies do not work at the macroeconomic level.”

–Foreign Energy: With global oil prices spiking on Middle East tensions, the Energy Information Administration looks at U.S. reliance on another foreign energy source: uranium. “Owners and operators of commercial nuclear power reactors buy uranium in the form of uranium concentrate, uranium hexafluoride, and/or enriched uranium. If uranium is purchased after the enrichment process, the only step remaining is the fabrication into nuclear fuel. Historically, U.S. owners and operators have purchased most of their uranium from foreign countries. In 2012, 84% of foreign-supplied uranium came from Canada, Russia, Australia, Kazakhstan, and Namibia. The rest came from Uzbekistan, Niger, South Africa, Brazil, China, Malawi, and Ukraine.” Read More »

Even in a weak job market, the old college try isn’t the answer for everyone.

A briefing paper out Wednesday from the Brookings Institution warns that “we may have overdone the message” on college, senior fellow Isabel Sawhill said.

“We’ve been telling … students and their families for years that college is the only way to succeed in the economy these days and of course there’s a lot of truth to that,” Ms. Sawhill said. “On average it does pay off… But if you load up on a whole lot of student debt and then you don’t graduate, that is a very bad situation.”

One refrain amid the years of slow job growth has been the value of education for landing a job and advancing in a career.

April’s national unemployment rate stood at 7.5%, according to the Labor Department. The unemployment rate for high-school graduates over 25 years old who hadn’t attended college was 7.4%, compared with 3.9% for those with a bachelor’s degree or more education. The disparity is even bigger among those aged 16-24. The jobless rate for those with only a high school diploma in that age group is about 20%. Read More »

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